The generation suffering the most from the current debt crisis is the same one which will be approaching retirement in 35 years when the promissory note debt matures, writes Dan Hayden.

THE DEAL ON the promissory note is good news for Ireland, but the choices the Government makes with its new-found budgetary latitude will be its real test. It should not escape attention that the group which is today suffering from the highest levels of unemployment, are being diverted into lower tier employment conditions, and parallel withdrawal of social and educational provisions are the same ones who will be approaching retirement themselves in 35 years when this debt matures. Committing to rebuilding the economy for this generation would mark this Government out as more far-sighted than its predecessors but it will require brave choices.

The Government finally has some evidence to show the public that it is delivering on its pre-election promise of debt relief. Trinity College Economist Philip Lane has estimated that based on a relatively conservative nominal GDP growth of 2 per cent a year, the value of the debt in 2048 when it matures will represent around 7.4 per cent of total GDP as opposed to a colossal 15 per cent today. Calculations of the interest rate in the meantime leave some hostages to fortune but, based on current conditions, they will be relatively low. While Ireland remains heavily indebted and economic growth is stagnant, the path to recovery at last looks sustainable in its own right – as opposed to requiring the application of some heavily rose- tinted spectacles.

Youth unemployment and crime

However, such a recovery may be an empty achievement unless the intergenerational issues which have developed during this crisis are addressed. Ireland’s economic crash has disproportionately affected young workers, with youth unemployment at 39 per cent nationally and as high as 50 per cent in the worst affected cities. Research has shown that even in the event of an economic upswing, these effects are long- term. Studies on the economic prospects for college graduates who enter the labour market in a recession show they will earn on average 17.5 per cent less per year, and more importantly, that these effects can persist for up to 17 years.

Young people are much more likely than older people to be unemployed – by a factor of two in some areas, and by as much as a factor of four in others. Experiences in other countries tell us that if this trajectory continues, it will leave more than individual tragedies in its wake. The wider consequences for society of long-term youth unemployment are well documented and wide- ranging. The motivations for the 2011 London riots are subject to ongoing debate, but most agree that the roots of those problems can be found in youth unemployment.

While older people are more likely to be afraid of crime, young people are much more likely to be victims of crime. In 2006, the last period for which figures are available, Irish people aged from 18-24 were five times more likely to be victims of crime than people aged over 65+. Those under 44 were more than two and a half times more likely to be victims of crime than those over 45. Young men in particular have worst affected by unemployment, and are also the group most likely to be victims of crime.

Emigration

In 2011, an Irish person aged between 15 and 24 was more than four and a half times as likely as someone over 45 to emigrate, and a person under 45 was about 10 times as likely to emigrate as someone over 45. There are certainly reasons why younger people may be more likely to emigrate at less cost than their older peers, but for many, emigration is a last resort.

The breadth and scale of government reform efforts since Labour and Fine Gael came to power betrays the fact that so far, this crisis has gone to waste. Reform of the public service has favoured current workers at the expense of new and younger hires. Progress on political reform has become progressively more simplistic and less ambitious. Interest groups have been largely effective in maintaining the budgetary status quo and while schemes like JobBridge are welcome and effective to a degree, their limitations are well documented.

There is at last some small opportunity for a departure from the politics of necessity which we have seen over the past three years, where the constraints of the crisis meant that governance felt like the absence rather than the presence of choice. Narrow as it is, the new budgetary space that this deal provides offers the best way for the public to understand the real values and goals of this government. Addressing unemployment is difficult but the first steps must be through meaningful retraining and educational opportunities. A principled commitment to equal conditions for new and young workers as Croke Park 2 is negotiated should be a high priority of the government. Governance could be improved by filling some of the open positions on our overwhelmingly grey state boards with younger candidates. Ambition and commitment to address these most pressing problems are the only way to halt the worsening generational divide.

Legacy of debt

Typical of Irish dark humour, within hours of the debt deal being made, a picture went viral on several Irish Facebook group pages. It depicts a twist on a classic scene from Father Ted’s famous caravan episode with a revised caption: Father Ted explains to Dougal “this debt is large… and this debt is far away”.

Ignoring distant problems contributed to this crisis, and exacerbated it at its height. But far away doesn’t mean gone, and it doesn’t mean resolved. When it comes to the children and grandchildren of today paying the costs of this generation’s mistakes, it cannot be an excuse for inaction.

When the time comes to pay off the principal on the debt in 2038, the younger generation and their own retirement funds may not appreciate the legacy they have been bequeathed.

Dan Hayden is a PhD Candidate at the UCD Regulation and Governance, specialising in public regulation, and an Irish Research Council Government of Ireland Scholar.

Dan is currently looking at how the terms of employment for new entrants have been affected by the crisis. If you are a young person employed on very different terms or pay than your older peers, he would like to hear from you at dan.hayden@ucd.ie.

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